Contractual project-based employees have no indefeasible right to regularisation or service continuity upon scheme completion.

The petitioners, contractual employees appointed under various projects/schemes by the Gujarat Urban Livelihood Mission and different Nagarpalikas, filed this writ petition in 2019 seeking regularization of their services and protection against termination.

At the time of filing, an interim order of status quo regarding their service conditions was granted

During the pendency of this case, identical petitions (e.g., SCA No. 19872 of 2017) involving similarly situated contractual employees were dismissed by a Single Judge, confirmed by a Division Bench, and the Special Leave Petitions were dismissed by the Supreme Court

The government notified that the current scheme would end on 31.05.2026

1. Whether contractual employees appointed under time-bound schemes have a legal right to regularization or continued employment after the scheme concludes

2. Whether the principles of regularization as laid down in Bhola Nath v. State of Jharkhand apply to employees with short-term contractual service protected by interim court orders

The Court applied the principle that project-based contractual employees have no indefeasible right to continue in employment once the scheme ends

The Court distinguished the precedent in Bhola Nath v. State of Jharkhand (2026 INSC 99), which mandates regularization for those serving long periods (10+ years) in sanctioned posts, stating it does not apply to those whose service length was achieved under the "protected umbrella" of a court's interim order

The court also noted the Supreme Court’s observation in SLP No. 25391-25392 of 2025 that authorities should use discretion objectively and avoid displacing experienced contract employees where possible

The Court found that the petitioners’ case was squarely covered by prior judgments involving the same Mission and schemes, all of which resulted in dismissal

The Court reasoned that the petitioners' continued service was merely a result of the 2019 status quo order rather than a substantive right to the post

It rejected the argument that changing the names of schemes entitled them to protection, noting that such arguments were already dismissed in allied matters

Furthermore, since the petitioners had not completed ten years of service at the time of filing and were not subject to standard civil service conditions like transfers or increments, they could not be treated at par with regular State employees

It held that the petitioners have no right to regularization upon the completion of the scheme

However, the Court directed the respondent Nagarpalikas to submit fresh proposals to the Mission within ten days to ensure all unpaid salaries (specifically for Oct–Dec 2025) are paid to the petitioners by 31.05.2026

It further observed that the State should exercise objective discretion in replacing experienced staff as per Supreme Court guidelines [para. 18]. Rule discharged